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(Alliance News) - Burberry Group PLC shares fell on Thursday, after the British fashion house said it is unlikely to achieve its annual revenue guidance amid a slowdown in luxury demand globally.
Burberry shares were down 8.9% to 1,589.50 pence each in London early Wednesday. Over the past 12 months, the stock is down 21%.
Reporting on its half-year period ended September 30, Burberry said pretax profit fell 13% to GBP219 million from GBP251 million. Adjusted operating profit declined 6.3% to GBP223 million from GBP238 million, as adjusted operating profit margin narrowed to 15.9% from 19.5%.
Revenue grew 3.8% to GBP1.40 billion from GBP1.35 billion a year before.
Retail revenue was GBP1.12 billion, up 5.9% from GBP1.06 billion a year ago, or up 10% at constant exchange rates. Wholesale revenue declined by 8.4% to GBP241 million from GBP263 million, but licensing revenue rose by 45% to GBP31 million from GBP21 million.
Retail comparable comparable store sales increased by 10% in the first half, but within this was a sharp slowdown to 1% in the second quarter from 18% in the first. Asia-Pacific sales grow slowed to 2% in the second quarter from 36% in the first. In EMEIA, 10% growth followed 17% growth. In Americas, a 10% decline followed an 8% decline.
"The slowdown in luxury demand globally is having an impact on current trading. If the weaker demand continues, we are unlikely to achieve our previously stated revenue guidance for FY24," Burberry warned.
Burberry had expected low double-digit revenue growth for the year.
This will have a knock-on effect on adjusted operating profit, which will be towards the lower end of the current consensus range of GBP552 million to GBP668 million. In financial 2023, Burberry reported a 21% annual increase in adjusted operating profit to GBP634 million.
Despite its caution, Burberry increased its interim dividend by 11% to 18.3 pence from 16.5p.
"We made good progress against our strategic goals, executing our priorities at pace. We continued to build momentum around our new creative vision with the launch of our Winter 23 collection in September, the first designed by Daniel Lee," said Chief Executive Officer Jonathan Akeroyd.
"While the macroeconomic environment has become more challenging recently, we are confident in our strategy to realise our potential as the modern British luxury brand, and we remain committed to achieving our medium and long-term targets."
By Sophie Rose, Alliance News senior reporter
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